Housing Snapshot
Last week's decision by the Federal Reserve to increase its federal funds rate from 1% to 1.25% had been widely anticipated, and it had no immediate impact on the cost of long-term mortgage financing. The cost of a 30-year, fixed-rate loan averaged 6.21% last week, according to Freddie Mac's index, which was slightly below the rate of the previous week. Adjustable rate financing, on the other hand, rose marginally. The Fed appears to be on a course of gradual interest rate hikes that are expected to bring its overnight lending rate to banks to 2% by the end of this year and the 3.5%-4.5% range by late 2005. Following the Fed's decision to increase rates, its first in four years, the prime interest rate generally climbed accordingly, to 4.25%. Casting some doubts about the current pace of economic growth, the Labor Department announced non-farm payroll growth of 112,000 in June, significantly slower than preceding months and below expectations. The significance of the downturn should become clearer when statistics are released for the next month or two. On the lumber front, the news remained positive. Framing lumber declined a modest $4 to $405 per 1,000 board feet, according to Random Lengths. The price of 15/32-inch 3-ply CDX southern west-east plywood dropped $20 to $295 per 1,000 square feet and oriented strand board remained unchanged at $300. The costs of both plywood and OSB were lower last week than they were a year earlier. [ MORE ]
Mortgage Interest Rates
30-Year Fixed-Rate: 6.21%
15-Year Fixed-Rate: 5.62%
1-Year ARM: 4.19%
Housing Starts - May 2004*
Total: 1.97 million
Single-Family Starts: 1.64 million
Multifamily Starts: 317,000
New Home Sales May 2004*
1.369 million
Existing Home Sales May 2004*
6.80 million
* Seasonally adjusted annual rate
